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CoStar's Retail News Roundup: Apr. 12 to 18, 2009

CoStar's weekly column covering expansions, new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales, loans, shopping center development activity, personnel changes, sustainability, green building, and more in retail real estate.
April 13, 2009
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Red Mango and Giant Food Stores; new retail development news in AZ and NY; acquisition, merger, loan or sale activity at WP Realty, Macquarie DDR Trust, Highwoods and Lane4, Dividend Capital and ING Clarion; closings, cutbacks, defaults, or bankruptcies at Z Gallerie, Ultra Stores, General Growth, Bruno's Supermarkets, Starbucks, and Fatburger; personnel announcements at Equity One and Ramco, SRS Real Estate, RCS Real Estate Advisors, and Sperry Van Ness; sustainability or green building news at BrandsMart and Target; and more.


Did you miss last week's CoStar Advisor national retail story, "NOT A GOOD START: First Quarter Retail Real Estate Trends Reflect Market Realities.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@CoStar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





EXPANSIONS / NEW CONCEPTS


Red Mango Announces 128 Franchised Frozen Yogurt Stores
Frozen yogurt chain, Red Mango, announced that it secured a record number of franchise developments during first quarter 2009. The company now has development deals with existing and new franchisees that will result in 128 new Red Mango stores over the next several years.

James Franks, vice president of franchising for Red Mango said, "The explosive growth of our brand will help us double our network in 2009 and set the stage to enter a series of new states in rapid succession." New stores will be located in existing states of CA and IL, as well as new states of TX, MA, IN, WI, MO, KS, and TN.

Specifically, a 46-store contract has been signed for Northern California, a 75-store contract has been signed to open stores throughout the Midwest, and a six-store contract has been signed for Texas.

Giant Opens First Giant To Go Store
Giant Food Stores this week opens its first Giant To Go, a mini-store concept, in Lancaster County, PA. A glorified convenience store, Giant To Go not only sells gasoline, but also fresh produce, meats, and bakery items. Prepared meals also play a large part in the 4,422-square-foot store's selection.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





NEW SUPPLY


Glimcher Opens First Phase of Scottsdale Quarter, Starts Phase Two
Glimcher Realty Trust (NYSE: GRT) opened the first phase of its Scottsdale Quarter lifestyle center in March 2009. Located upon 28 acres at the southeast corner of Scottsdale Road and Greenway-Hayden Loop in Scottsdale, AZ, the company said Phase One is 90% leased. Phase one tenants include Williams-Sonoma Home (opened 3/26/09), Nike, H&M, Oakville Grocery, BRIO Tuscan Grille, and Martini Park.

Glimcher has already started construction on the second phase, with demolition of a former Dial building complete and the foundation poured. Two-thirds of the retail space in all phases is "spoken for," said Glimcher.

When complete, Scottsdale Quarter will include 370,000 square feet of mixed-use retail and restaurant space; 35,000 square feet of entertainment space; 205,000 square feet of office space (already 33% leased); a hotel; and residential space.

Taubman's Oyster Bay Back to Square One
Taubman Centers (NYSE:TCO) received notice from an appellate court that if it wishes to continue on its quest to develop the 750,000-square-foot Mall at Oyster Bay in Long Island, it has to submit a new environmental impact study. Taubman has yet to announce if it will proceed with the project after this huge setback. Oyster Bay's location is planned for the 39-acre site of the former Cerro Wire campus, which is on the north side of the Long Island Expressway at exit 43. If it does proceed, Taubman may decide to re-plan the project as mixed-use with a substantially smaller retail component.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





ACQUISITION/MERGER/SALE/LOAN ACTIVITY


WP Realty Sells South Brunswick Square for $44.45M
Bryn Mawr, PA-based WP Realty recently sold South Brunswick Square, a 260,981-square-foot grocery-anchored shopping center located along U. S. Highway Route 1 in South Brunswick, Middlesex County, New Jersey. Royal Management acquired the center for $44.45 million, or approximately $170.32 per square foot.

The center was built in 1988, renovated in 2004 with the expansion of Stop & Shop, and again in 2005 with the construction of a 104,664-square-foot Home Depot. Other tenants residing at the 100% occupied center include Bob's Stores, Dollar Tree, Blockbuster, and Friendly's.

WP Realty specializes in acquiring underperforming centers and making necessary improvements. The company purchased South Brunswick Square in June 2003 for $24.35 million from SBS Acquisition Associates, when the center was 89% occupied.

For more information, see CoStar COMPS ID# 1681805.

Macquarie - Developers Diversified Joint Venture Puts 52-Property Retail Portfolio Up for Sale
Macquarie DDR Trust (ASX:MDT), a joint venture between Aussie-based Macquarie and U.S. retail REIT, Developers Diversified Realty Corporation (NYSE:DDR), put a portfolio of 52 U.S. shopping centers up for sale.

As of Dec. 31, 2008, MDT said the portfolio of assets were valued at $1.9 billion, which accounts for 70.4% of the Trust's total asset value. MDT first foreshadowed this portfolio listing when on Mar. 19, it said MDT's intentions were to "reorganize and simplify" its ownership in certain joint venture interests. The trust is considering purchasers interested in a limited 85.5% ownership interest or 100% interest in the portfolio.

The portfolio totals 12.5 million square feet, has an average occupancy of 88.5%, and is spread across 20 states. Comprised primarily of community shopping centers, the portfolio's major tenants include Walmart, BJ’s Wholesale Club, Bed Bath & Beyond, Best Buy, T.J. Maxx, Kohl’s and Dick’s Sporting Goods.

Holliday Fenoglio Fowler ("HFF"), along with Macquarie Capital Advisers and UBS Securities, serve as co-advisors marketing this portfolio for sale. HFF executive managing director John Pelusi, senior managing directors Barry Brown and Doug Hazelbaker and managing director Lynn De Marco are leading the HFF investment sales team on behalf of the seller.

Macquarie is also in the process of dissolving its joint venture with Jacksonville, FL-based shopping center REIT, Regency Centers (NYSE:REG). In late January, Macquarie said Inland American Real Estate Trust would acquire 30 of the 35 shopping centers held under the joint venture, for $427 million.

Highwoods Under Contract to Sell Three Kansis City Area Centers for $64 Million
Highwoods Properties has reportedly reached a deal to sell three Kansas City-area shopping centers in a portfolio transaction. According to bizjournals.com, Lane4 Property Group will emerge as the buyer of the three centers, which combined, have an appraised value of about $64 million, according to Johnson County Property Appraiser figures.

Details on the centers:

  • Prairie Village Shops: 6940 Mission Road, Prairie Village, KS. This shopping center features Macy's, Starbucks, and Chico's as primary tenants and has about 6,000 square feet of space available. According to CoStar Property, this shopping center totals about 278,000 square feet.

  • Corinth Square Shops: 83rd & Mission Road, Prairie Village, KS. This center features Hen House Market and Westlake Hardware and has about 17,500 square feet of space available. According to Highwoods, this center totals 322,594 square feet.

  • Fairway Shops: Belinder & Shawnee Mission Parkway, Fairway, KS. This center features First Watch and Hen House Market and with 20 stores, totals 40,686 square feet.


Highwoods does not specialize in retail. At year-end 2008, its holdings amounted to 311 office, industrial and retail properties totaling 27.4 million square feet. Retail properties account for only 4.9% of this total.

Dividend Capital Total Realty Trust Acquires MD Center from ING Clarion for $65M
Denver, CO-based shopping center REIT, Dividend Capital Total Realty Trust, recently closed on the acquisition of 270 Center in Gaithersburg, MD for $65 million (according to Montgomery County property records) from ING Clarion Partners.

The 232,717-square-foot center was 100% leased to seven tenants including Best Buy, Home Depot, and Nordstrom Rack at the time of sale. Despite this, the sale price is significantly less than ING paid for it -- ING acquired the center for $68.67 million in April 2004.

Bill Kent and Gary Lawrence of CB Richard Ellis represented the seller in the transaction. For more information, see CoStar COMPS ID# 1683063.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





CLOSINGS/CUTBACKS/BANKRUPTCIES/DEFAULTS


Z Gallerie Files Bankruptcy; Closings Likely
Home furniture, art and accessories retailer, Z Gallerie, filed for Chapter 11 bankruptcy protection on Apr. 10, 2009. The Gardena, CA-based company listed assets and liabilities between $10 million and $50 million in the filing.

Z Gallerie cited a "severe" sales decline as the primary issue driving its bankruptcy -- the retailer reported 2007 sales of $223.8 million, 2008 sales of $189.9 million (down 15.5%), and January 2009 sales that were 19.4% lower than the prior year.

In late February, Z Gallerie commenced store closing sales at 25 of its stores across the country -- at the time, it operated 77 stores in 24 states. The retailer's stores are typically 10,000 square feet and located in upscale malls or lifestyle centers, according to CoStar Tenant.

Additional store closings are likely for the retailer, as Z Gallerie said in the bankruptcy filing that intends to weed out underperforming stores from its fleet and reorganize.

Additionally, the company said it February it was downsizing its distribution network. According to CoStar Tenant, Z Gallerie leases 264,000 square feet within the Greenwood Industrial Park in McDonough, GA. Its headquarters is a 120,000-square-foot office/warehouse building located at 1855 W 139th St. in Gardena, CA.

To download the list of Z Gallerie's current store locations, click here.

162-Store Ultra Jewelry Files Bankruptcy for the 2nd Time
Off-price jewelry chain, Ultra Stores Inc. (also known as ULTRA Diamonds), filed chapter 11 at the U.S. Bankruptcy Court in Southern District of New York on Apr. 9, 2009.

Aside from slow sales in line with the down economy, Ultra suffered an $11 million loss in liquidity, as it defaulted on a Bank of America credit facility and term loan held by Crystal Capital Fund Management. The company said Bank of America has agreed to provide a $30-million debtor-in-possession facility to fund Ultra's operations during the bankruptcy process.

Ultra, which is partially held by private equity company William Blair & Co., listed assets and liabilities between $10 million and $50 million in the filing. This is Ultra's second time in bankruptcy -- The company last filed in March 2001 and emerged in early 2002. According to Hoover's, Ultra reported 2007 revenue of about $55.8 million and employs about 650 people.

On its website, the Chicago-based retailer said it currently operates 162 stores across the country, but Reuters said the retailer has 181 locations, in addition to operating jewelry counters within Filene's Basement, Burlington Coat Factory, and Daffy's stores. The company requested court permission to immediately start liquidation sales at 12 stores, but also asked that it have the freedom to close more stores in the future without court approval.

Several of Ultra's stores are located in prime downtown shopping areas, but the majority are located at outlet shopping centers. According to CoStar Tenant, Ultra is a popular tenant at Tanger's factory outlet centers and its stores are typically 2,000 square feet.

GGP's Jordan Creek & Chico Mall in Trouble, by Mark Heschmeyer
According to Andy Day, CMBS research analyst for Morgan Stanley, two more of General Growth Properties' (NYSE:GGP) mall loans encountered trouble this past month, adding to the billions of dollars of matured unsecured and mortgage debt the REIT is already confronting.

Jordan Creek ($165 million, part of JPMorgan 2005-LDP5) is a 939,000-square-foot development in West Des Moines, IA, that matured without repayment. GGP is in the final stages of negotiating a 12-month extension. The property's debt service coverage was 2.7x at 95% occupancy as of September 2008.

In addition, General Growth's Chico Mall ($39.7 million, part of CD 2005- CD1) fell 30 days delinquent after missing its February balloon payment. The special servicer of the CMBS has engaged counsel to protect the trust.

California / Nevada Fatburger Franchisees File Bankruptcy
Two of the largest Fatburger restaurant franchisees, Fatburger Restaurants of California and Fatburger Restaurants of Nevada, filed Chapter 11 bankruptcy on Apr. 7, 2009. The companies operate a total of 32 restaurants in the two states; but according to Fatburger's corporate website, there are 36 restaurants in California and 14 in Nevada.

These two franchisees employ about 490 people and brought in 2008 sales of $26 million, accounting for 72% of the parent company's revenues, according to the Wall Street Journal. Reportedly, the franchisees have experienced declining sales for the last three years and were unable to obtain adequate financing to prevent bankruptcy.

The franchisee's bankruptcy plan is to restructure or reject unfavorable leases in an effort to only leave profitable locations in operation. According to CoStar Tenant, Fatburger's California and Nevada restaurants average 1,750 square feet each and range in size from 500 to 5,750 square feet.

Starbucks Lists 200 Stores Set to Close
On Jan. 28, 2009, Seattle-based coffee magnate, Starbucks Corporation (NASDAQ: SBUX), announced it would close 200 underperforming company-operated stores, which was in addition to the 600 store closings the company announced in July 2008.

Follow this link to download the list of the 200 stores closings, which Starbucks posted on April 9, 2009 -- the company previously said these stores will close by the end of its fiscal year, which closes out this September. The majority of these closures are in California (76), while others are spread out across the country.

For more on the. Jan. 28 announcement, follow this link.

Bruno's Supermarkets Plans to Liquidate if Sale Falls Through
Bruno's has received a bidder for 36 of its 56 stores, according to The Progressive Grocer. However, the grocer has said this offer is unacceptable, as the price is only "marginally above liquidation value" and has numerous "untenable" contingencies. If no purchase is arranged, Bruno's plans to fully liquidate. For more on Bruno's bankruptcy filing, follow this link.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





PERSONNEL ANNOUNCEMENTS


Equity One Proposes Two Candidates for Ramco-Gershenson's Board
Early on Apr. 9, Equity One (NYSE:EQY) announced today that it gave notice to Ramco-Gershenson Properties Trust (NYSE:RPT) that it intends to nominate two independent candidates for election to Ramco's board at its June annual meeting. Equity One said that in the interest of nominating "independent" parties to Ramco's board, it has selected David Nettina, a former REIT industry executive, and Matthew Ostrower, a former Morgan Stanley REIT analyst, both of which Equity One says it has no previous business relationship with. Equity One currently holds an approximate 9.6% stake in Ramco. Ramco responded to Equity One's announcement later that day, saying it will carefully consider the electing Ostrower and Nettina.

RCS Real Estate Advisors Establishes Chicago Offices, Hires SVP and VP
Retail real estate advisory and disposition firm, RCS Real Estate Advisors, recently announced the opening of a new Chicago office, coinciding with the hiring of Scott Keeney as Senior Vice President and Kenneth Green as Vice President.

With 25 years of retail leasing experience, Keeney most recently served as SVP of leasing and management at General Growth Properties (NYSE:GGP), where he was a lead specialist in lease workouts, generating more than $60 million in termination revenue for the mall REIT. In addition, he was responsible for managing 48 malls worth $5 billion for GGP.

Green's 30 years of combined retail real estate and legal experience includes most recently serving as VP of real estate and general counsel for Namco Cybertainment, where he managed the real estate, legal, construction, repair and lease administration departments.

Hood Joins SRS Real Estate Partners
SRS Real Estate Partners (formerly Staubach Retail) recently hired Jeffrie L. Hood as a retail tenant representative, working out of the firm's Tampa office. Hood's 20 years of retail real estate industry experience includes most recently serving as regional VP in charge of lease transactions for Golf Galaxy. At one time, Hood also served as director of real estate for Circuit City.

Sperry Van Ness Orlando Hires Senior Advisor
The Orlando office of Sperry Van Ness recently hired Jeff Henwood as a senior advisor, specializing in retail property sale transactions. Working out of the company's Lake Mary office, Henwood reports to Miguel de Arcos, managing director. With 24 years of investment securities related experience, Henwood served as Vice President of Investments for financial institutions including Smith Barney, Merrill Lynch and UBS PaineWebber.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.





SUSTAINABILITY/ GREEN BUILDING


BrandsMart USA Building Green Store in Georgia
BrandsMart USA is building an Atlanta-area store to achieve Leadership in Energy and Environmental Design (LEED) certification from the US Green Building Council (USGBC). The company hopes to cut energy use at this store by nearly 50% compared to a typical BrandsMart store. Aside from recycling of construction waste, Plans include rainwater collection and re-use, installation of solar panels, and efficient water fixtures. The new store will be located near the Mall of Georgia. According to CoStar Tenant, the company's typical Florida or Georgia stores are about 20,000 square feet.

West Palm Beach Target Expected to Use Wind-Powered Energy
A Target store under construction in West Palm Beach, FL is expected to be home to a windmill soon after its opening, scheduled for this October. The retailer projects that a 100-foot windmill, located right next to its building, would generate about 5% of the energy needed to power the 150,000-square-foot space. Such an installation could be the retailer's first in the United States.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.

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